Cyprus: Launching An ICO Through Cyprus

We set out below a summary of relevant considerations when launching an initial coin offering (ICO) through Cyprus. For these purposes we assume the ICO is structured through Cyprus as a Cyprus company. Alternative vehicles may also be appropriate depending on the intended structure of each individual ICO.

Unlike many other popular jurisdictions for ICOs, Cyprus is an EU Member State and as such founders must comply with the panoply of Single Market regulation emanating from the EU. However, since ICOs (at this point in time) are largely unregulated, the benefits of launching in Cyprus can be significant: a European base and central time zone, as well as access to the jurisdiction's vast array of tax treaties and overwhelming 'white list' status among tax authorities globally.

Primary Legal and Regulatory Considerations

The following laws are the most relevant to structuring an ICO through Cyprus:

  • Investment Services and Activities and Regulated Markets Law 2007 (IS Law), which implements EU Directive 2004/39/EC on markets in financial instruments.
  • Prevention and Suppression of Money Laundering and Terrorist Financing Law 2007 (AML Law), which implements EU Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, also known as the Third Money Laundering Directive (3AMLD).
  • Payment Services Law 2009 (PS Law), which implements EU Directive 2007/64/EC on payment services in the internal market (Payment Services Directive).
  • Electronic Money Law 2012 (E-Money Law), which implements EU Directive 2009/110/EC on the taking up, pursuit and prudential supervision of the business of electronic money institutions (E-Money Directive).
  • Prospectus Law 2005 (Prospectus Law), which implements Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading.
  • Alternative Investment Fund Managers Law 2013, which implements Directive 2011/61/EU on alternative investment fund managers (AIFM Law).
  • Alternative Investment Funds Law 2014 (AIF Law).
  • Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).
  • EU Regulation 910/2014/EU which regulates the use of electronic identification and electronic identification (E-Signature Regulation).

We provide below a short description of the issues which each law seeks to address. The extent to which each such law is relevant to an ICO will depend on the specific terms and structure of the ICO.

IS Law

Under the IS Law, a person may not carry on or purport to carry on investment services and investment activities on a professional basis unless that person holds a licence granted under the IS Law. The definitions of "investment services" and "investment activities" are set out in the IS Law. "Financial instruments" are defined through a list of instruments common in today's financial markets, however no specific mention of digital tokens or cryptocurrencies is made. The IS Law contains certain safe harbours which allow the provision of investment services as well as the performance of investment activities without the requirement to hold a licence under certain circumstances.

Each ICO will need to be evaluated on its merits, although it would seem that many ICOs would not be caught within the ambit of the IS Law since they would not amount to financial instruments as defined. However, ICOs which offer tokenised securities may be caught.


The AML Law needs careful consideration with respect to all ICOs launched through Cyprus. The AML Law and directives issued by the relevant supervisory authorities focus primarily on the regulated sector in Cyprus and prescribe certain policies and procedures to be put in place by Cyprus regulated entities with respect to money laundering. Given the general application of the AML Law, we would caution any ICO team against thinking that if their intended ICO falls outside the ambit of the AML Law they need not concern themselves with anti-money laundering issues. Whatever the final determination is, we believe that there are solutions available in the market to mitigate against any person launching the ICO from falling foul of the AML Law.

The AML Law currently implements 3AMLD. 3AMLD has been recently replaced at the EU level by the Fourth Anti-Money Laundering Directive (EU) 2015/849 (4AMLD). This has not yet been implemented into Cypriot law, but is due to be towards the end of 2017. Importantly, the European Commission adopted proposals on 5 July 2016 for legislation to amend 4AMLD (these amendments being referred to informally as the "Fifth Anti-Money Laundering Directive") that will require cryptocurrency exchanges and wallets to conduct KYC and identify suspicious activity on users and investors. As such, we expect Cypriot ICOs to be expressly caught by the AML regime in the near future.

PS Law

The main purpose of the Payment Services Directive has been to address the fragmentation of the European payment services market and further to increase competition in the payment services sector. Accordingly, the PS Law regulates all types of electronic and non-cash payments, such as credit transfers, direct debits, card payments, and mobile and online payments.

In certain circumstances an ICO may constitute the provision of a payment service.

E-Money Law

The E-Money Directive modernises the regulatory framework applicable to electronic money institutions and to address a number of inconsistencies which caused a disruption of the level playing field between payment services institutions and electronic money institutions. The E-Money Law implements this regime in Cyprus, and obstacles which previously prevented the arrival of new entrants in the sector are now resolved.

As with the PS Law, the E-Money Law may impose regulation of ICOs in certain circumstances.

Prospectus Law

The Prospectus Law requires that a prospectus be published in respect of "a public offer of securities", which means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities and includes.

Determining whether the tokens offered in an ICO may be considered to be "securities" in this respect will be key. To the extent that they are, certain exemptions apply which may in any case apply so as not to require a prospectus to be published.

Laws governing collective investment schemes

Collective investment schemes in Cyprus may be either undertakings for collective investment in transferable securities (UCITS) regulated by the UCITS Law or alternative investment funds (AIFs) regulated by the AIF Law and AIFM Law. In practice UCITS will not be relevant in ICOs but the AIF Law may be, where the ICO operates as a collective investment scheme offering equity or equity-like instruments.

FATCA and the CRS

FATCA and the CRS relate to the automatic exchange of information between jurisdictions for the purposes of combatting tax evasion. The extent to which these pieces of legislation will be relevant to an ICO will depend on the structure and, particularly in relation to FATCA, the beneficial ownership of the company acting as issuer in the ICO. Although not directly relevant to the launch of an ICO, these considerations also need to be given due attention when preparing the ICO.

E-Signature Regulation

The E-Signature Regulation is relevant to determining the requirements for accepting electronic signatures on terms and conditions or purchase agreements for tokens. Care needs to be taken that the ICO subscription process complies with the E-Signature Regulation's requirements.

Contract law

Furthermore, to the extent that the purchase of tokens will be governed by Cypriot law agreements and terms and conditions, the rules of Cypriot contract law will also need to be observed. Contract law in Cyprus is governed by the Contract Law, Cap.149 of the statute laws of Cyprus, as well as common law development in the Cypriot courts and English common law principles adopted in Cyprus. Cypriot contract law is based on English contract law, and offers a flexible and commercially sensitive regime within which business can be conducted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions